Teaching airlines the meaning of the word transparency

If you heard about a new rule or law being proposed and it had the word “transparency” in the title you’re likely think that the goal was about showing everything in a clear and reasonable manner, right? That’s what Airlines for America, the industry trade group, wants you to think about the “Transparent Airfares Act of 2014” which has made it out of Committee in the US House of Representatives. The lobbying group claims that they are working “to restore transparency in the Department of Transportation’s (DOT) airline advertising rules to ensure consumers know exactly how much of their travel dollars are going to federal taxes.” What they are actually doing is trying to hide the full price consumers pay. They want to allow for the publishing of fares far lower than what a customer will actually pay in hopes of generating more business by attracting consumers with lower numbers and then having those customers simply acquiesce when they realize the total price.

Yes, air travel has a relatively high tax rate associated with it in the USA. It is somewhere around 20% on most domestic trips. That’s money that the airlines have to roll up in to the full fare but which they never see penny one of in their coffers. But the consumers are still paying that money. Hiding it late in the sales process is not the right way to call attention to the split. And there is absolutely nothing preventing the airlines from identifying that split at any point in the fare advertising process, so long as they also show the full fare. Many airlines already do show the split on their websites as part of the process. These four all show the numbers before a customer clicks off the search results page:

Not all airlines include the breakdown on the front page of their website search results. United, for example, only includes the split on the second page, after you select the segments. American Airlines and Alaska Airlines don’t split it out in the first few pages of the transaction at all. But that is their choice, not something the government has mandated upon them.

In fighting to support the split the airlines and a few people I’ve spoken with about the potential change suggest that it is not fair for the airlines to be required to publish the all-in fare while other industries are not required to do so. It is true that hotels and rental car companies are not required to publish all-in fares. And that’s a shame. Let’s get together and force them to step up to the challenge of being honest and up front with their customers rather than hiding the true cost in the details. Bring them up to the full-fare standard rather than allowing airlines to regress.

Also, there is the part where only airlines and interstate rail service are truly federally-regulated transportation industries and both are currently required to show full-fare rates. Gas stations are another example where they must advertise the full price of their product, including all taxes. And as a society such a standard has been supported for decades. Does it mask 20%+ taxes in some states? Absolutely. But the consumer benefits from knowing going in to the transaction what the full price is.

The airlines have a choice: They can publish the full details of a fare breakdown if they so choose. They do not need permission from the government to do so. Instead of making that choice, however, they are working to hide the details of the full fare, removing information from display to the consumer. And they’re doing it under the guise of the word “transparency.” Most depressing is that they’ll probably succeed. Because they’ve got a lot of money and a lot of lobbyists. And the consumers have none.

8 Responses

If we allow the airlines to advertise without taxes included, it can only be government taxes. Eliminate the ability to “hide” surcharges (fuel) in the section currently labeled “taxes & fees.”

Part of the reason the taxes are higher is that airlines are finding ways to move the cost of air travel out of the taxable portion and thus the government compensates by raising the taxes that support the infrastructure.

Fuel surcharges are taxable by the feds and the airlines do pay taxes on that revenue. They break it out because it lets them exempt the fees from corporate discounts and such, not to avoid taxes.

US, which shows the split on the fare results page, does include the YQ in the “taxes & fees” section. UA, which only shows the split on the next page, does not include the YQ in the “taxes & fees” breakdown. They do eventually included it as part of the “taxes, fees & surcharges” in the eTicket receipt they send via email.

Basically it is all over the place. And that’s all the more reason to not allow the airlines to choose how to represent the data.

@M2 – unless I’m misunderstanding or have missed something (quite possible), I am not reading that this bill would enable the airlines to hide the YQ portion of a fare from the initial display price. YQ is not a tax by government, but a “tax” by airlines. So if YQ is bundled with the base fare, as I understand, that combined price must still be shown, and is not something that can be “broken out as a separately-displayed line-item at the end of the booking process.” If I am wrong and someone can show otherwise, please let me know.

I automatically make the assumption that a bill supported by the airline industry is bad news for consumers. It is a shame, and I agree that the “transparency” should be to have other travel service providers show the “full, true, all-inclusive price,” rather than have the airlines “dumb down” the price stratification. But you make a solid point in that the airlines are federally-regulated, so that is a crucial difference in the ability for DOT to mandate the current “full disclosure price.” So this bill was reported out of committee…as a stand-alone bill, it probably passes the GOP-led House. If part of an omnibus bill, it still probably passes the House. The question is, where does the Senate fall? And if it passes the Senate, is this truly deemed a veto-worthy bill by the White House?

Agree this is bonkers. In Europe prices are advertised all-in – so much easier than having to manually add taxes to everything. They should be force to display the total price in advertising and then forced at checkout to split out government taxes from their own quasi-taxes!